from the oops dept

Hollywood already succeeded in getting UK courts to force ISPs to block access to Newzbin2, a Usenet service that the industry insists could only have been used for infringement. And that led Newzbin2 to eventually shut down. But, the Hollywood studios want more. They've been trying to get money from the operator of Newzbin2, demanding any and all proceeds. But, surprisingly, that effort failed yesterday as the judge noted they had no rights to such profits and, importantly that just handing over the proceeds from a business like that might create chilling effects and stifle innovation:

On [Hollywood's] case, a copyright owner's claim would not even be limited to the infringer's profits: in principle, the entire proceeds of sale would be held on trust for the copyright owner. That might both be unfair and stultify enterprise. The proceeds of an infringement might be out of all proportion to the profits generated (e.g. because of the cost of raw materials used in the infringing product). It might not seem just for even a deliberate wrongdoer to have to pay the copyright owner the amount of his gross receipts, and an infringer need not have known that he was breaching copyright. Further, were Mr Spearman's [lawyer for the studios] submissions correct, a person might be deterred from pursuing an activity if he perceived there to be even a small risk that the activity would involve a breach of copyright or other intellectual property rights. As was submitted by Miss Lambert, that could have a chilling effect on innovation and creativity.

Basically, the judge is recognizing that the entertainment industry is completely overvaluing the content, and arguing that any and all money made is 100% due to the content, and not due to any other factors. And that's ridiculous. The judge used some analogies:

Suppose, say, that a market trader sells infringing DVDs, among other goods, from a stall he has set up on someone else's land without consent. The owner of the land could not, as I see it, make any proprietary claim to the proceeds of the trading or even the profit from it. There is no evident reason why the owner of the copyright in the DVDs should be in a better position in this respect.

The Motion Picture Association responded to this loss by saying that this is just "one particular point" in the case, and that it is planning to appeal. And, either way, they point out, what really matters is that Hollywood shut down Newzbin2. Yes, Hollywood killed another service that had figured out how to distribute content better than Hollywood. And, in the end, isn't that all that really matters? So long as Hollywood can keep killing services who do things better than Hollywood, the rest is just gravy.

from the opening-the-floodgates? dept

For many, many years the debate has raged on whether or not software developers should be liable for bugs in software. Plenty of companies, sick of dealing with buggy software, have felt that developers should be legally liable, just as any other defective product. But many argue back that, with software, that's not really reasonable, since pretty much all software has bugs. That's the nature of software -- and making developers potentially liable for "defective" offerings, because the software has some bugs, opens up so much liability that it could cast a chill across all sorts of software development -- especially in areas where software is especially buggy. And, of course, there's a strong argument that those unintended consequences would do significantly more harm than good, such as driving good developers out of the business, because the liability is just too high.

Of course, it also sounds like there were some special conditions here:

The judge said that the exclusion of liability was unfounded because of the particular way in which the software sale had been conducted. The fact that a full set of operating documents for the software had not been provided and the fact that Kingsway made its purchasing decisions largely based on Red Sky's claims for the software eroded Red Sky's ability to limit its liability, the Court said.

"Red Sky's' standard terms were predicated on the fact that a prospective customer would investigate Entirety [the software] and make up its own mind whether or not to purchase based on demonstrations and the Operating Documents which Red Sky had previously supplied," said the ruling. "It did not apply to circumstances in which the customer relied on Red Sky's' advice in deciding to purchase Entirety."

"The exclusions in clause 10.2 [of the terms and conditions] only applied where the Operating Documents as defined in Clause 1.1.6 were supplied to the customer before the contract was signed," it said. "In this case such documents were not supplied by Red Sky to Kingsway. Therefore, Clause 10.2 and the exclusions derived there from did not apply."

So, as the article notes, the issue here may be more about liability arising from the sales process, rather than just general liability, so it hopefully won't have the same sorts of chilling effects that general liability for bugs might have.

from the innovation-going-elsewhere dept

Reuters has a short article detailing how the UK has been successful in luring a growing number of foreign entrepreneurs to open up shop (or even move their companies to the UK). While there are still plenty of foreign entrepreneurs starting or moving companies to the US, it's got little to do with the US government -- which often makes it quite difficult for foreign entrepreneurs to relocate here. While, thanks in large part to Brad Feld's activism, there is finally some movement on a startup visa concept, the US government still takes a rather hostile view towards foreign entrepreneurs and foreign startups. With other countries actively courting and welcoming them -- and backing it up with some infrastructural changes, this should be seen as a serious problem for US innovation. Of course there's a lot more to this issue, and there are certainly institutional reasons why the US has long had a strong startup culture, but we shouldn't merely assume that we can just rest on our laurels, especially as others are ramping up their efforts to attract hot startups.